Autumn in New York: Factory expansion slows, input prices at multi-year highs - Empire State
SPY•Empire State manufacturing growth slows in September
Investors began their Tuesday with a relatively minor chunk of economic data courtesy of a report from the New York Federal Reserve, which showed that while factory activity in New York State has continued to expand this month, it lost quite a bit of oomph.
The notoriously volatile New York Fed's Empire State index USEMPM=ECI slid 13 points to print at 7.6, an abrupt deceleration from August's 20.6 and landing well south of the 15.0 consensus.
But at least it remains above water: a positive Empire State reading indicates monthly expansion; a negative print signifies contraction.
Underlying details show slower orders and higher price pressures
Below the surface, new orders expanded at a much slower pace while shipments pulled into contraction and "supply availability continued to worsen," according to the press release. Inventories and employment increased and delivery times "lengthened substantially."
But input prices and selling prices — inflation predictors — heated up considerably, with input costs touching a four-year high.
"On the heels of strong growth in August, New York State manufacturing activity continued to pick up modestly in September," says Richard Deitz, economic research advisor at the New York Fed. "Employment grew at a solid pace, while pricing pressures intensified."
On Thursday, the Philadelphia Fed will release its Philly Fed manufacturing report, which should help flesh out the picture of the current month's Atlantic region factory activity.
"The manufacturing sector has swung from a mild downturn to solid expansion this year," writes Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. "The jump in oil prices, however, casts a shadow over the sector’s upturn."
